Intro - An introduction to managerial accounting. 1 As the...

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An introduction to managerial accounting. 1
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As the name indicates, managerial accounting plays an integral role in the management of a company. It is a discipline within the field of accounting that provides information to managers, and other internal users, to enhance decision-making and the efficiency and effectiveness of the company’s operations. In doing so, managerial accounting helps managers fulfill their four primary responsibilities. An overarching responsibility of a manager is to make decisions. In a highly competitive , global environment, it is imperative that managers make well informed decisions that are based on appropriate data and analysis that synthesizes both quantitative and qualitative factors. The activity of planning is performed by all levels of management. Top or strategic level managers determine the overall course for the company and strategic initiatives such as developing a new product line or investing in new technology. The mid or tactical level of management specifies how the objectives will be accomplished and allocates resources to be used in doing so. These plans are expressed in the form of a company-wide budget that will be used during the upcoming year to measure the firm’s success in meeting its goals. A company’s plan is accomplished through the assignment of tasks and responsibilities, along with allocating the resources required to accomplish them. This managerial activity is referred to as directing and is primarily the responsibility of mid, or tactical-level managers. Controlling is an important element of the management cycle. It is the act of using feedback to ensure that plans are being followed and achieved, and making adjustments to a company’s tactics to get back on course when they are not. 2
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The planning and control cycle is an iterative and ongoing process, where management plans for the future, allocates resources, monitors progress and fine tunes the company’s operations 2
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primary objective is to provide information to external users that is useful in making credit and investment decisions, while managerial accounting serves the needs of internal users engaged in planning, directing and controlling a company’s operations. Financial accounting provides information via standardized general purpose financial statements, which include the income statement, balance sheet, statement of stockholders’ equity and the statement of cash flows. Managerial accounting provides information via internal reports that are developed according to the users’ needs. Financial accounting information must be prepared in compliance with generally accepted accounting principles (GAAP), while managerial accounting is not bound by authoritative rules. 3
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Intro - An introduction to managerial accounting. 1 As the...

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